Trade in Services Negotiations: Scheduling techniques Achim Seiler, Trade Consultant and Capacity Building Specialist, Kathmandu EU-Project: Trade and Private Sector Development (TPSD) TPSD is implemented by in cooperation with and

Types of Scheduling Approaches Positive List: Largely based on WTO GATS, has been the traditional approach for most (but not all) RTAs between developing countries Negative List: Largely based on NAFTA; increasingly adopted since 2000 and becoming standard practice for the majority of RTAs Hybrid Approach: Variations on either approach; being followed in the TISA negotiations Source: Stephenson

Types of Scheduling Approaches (II) Positive List: GATS approach (Bottom up) Sectors are listed by choice. Commitments do not apply unless the sector and/or specific subsector is inscribed in the schedule The way the commitment is expressed in both, the MA and NT columns is generally negative: setting out the limitation that is inconsistent with the agreement All limitations to MA and NT must be listed unless - full commitment to maintain no restrictions (“NONE”) - no commitment at all (“UNBOUND”) Source: Stephenson

Types of Scheduling Approaches (III) Negative List Approach (Top Down) Presumption: everything liberalized unless otherwise specified. However… Annexes of non-conforming measures provide flexibility to the comprehensive coverage assumed - Annex 1: stand-still schedule. Existing measures included at the level of regulatory application; commitment to make the sector no more restrictive in the future - Annex 2: Measures (sectors) permanently excluded from the agreement; government retains full regulatory freedom Source: Stephenson

Types of Scheduling Approaches (IV) Hybrid Approach Combination of key features of positive and negative list approaches, e.g. positive list of sectors plus scheduling the regulatory status quo (Philippines-Japan) positive listing for cross-border trade (mode 1) and negative listing for commercial presence (mode 3) (Korea-US) Negative listing for banking services and positive listing for insurance services Positive list for Market Access, negative list for National Treatment (TISA)

Types of Scheduling Approaches (V) Positive List Negative List Hybrid Approach Market Access Voluntary sectoral coverage Comprehensive sectoral coverage Binding restriction/limitation at level of choice No restrictions maintained unless indicated as non-confoming measures; Binding of restricions at level of applied laws Binding at level of applied laws for limitations in schedules for the sectors included Source: Stephenson

Types of Scheduling Approaches (VI) Positive List Negative List Hybrid Approach National Treatment Voluntary sectoral coverage Binding restriction/limitation at level of choice Non-discriminatory treatment obligation unless otherwise specified in exceptions (bound at applied level) Mandatory inclusion of all service sectors within national treatment obligation; Limitations to national treatment taken out and bound at applied level Source: Stephenson

Positive List Approach (I) Listed Listed Not listed Not listed Not listed Sectors are listed by choice. Commitments do not apply unless the sector and/or specific sub-sector is inscribed in the schedule

Positive List Approach (II) Listed Listed Not listed Not listed Not listed Inscribed commitments (red line) can deviate from the status quo/ the applied regulatory regime (black line), thus leading to a binding overhang

Positive List Approach (III) MA and NT limitations MA and NT limitations Not listed Not listed Not listed Inscribed commitments can come with formal MA and NT limitations, i.e. limitations which are in principle inconsistent with the agreement

Positive List Approach (IV) MFN exeptions MFN exeptions Not listed Not listed Not listed A country must provide a complete and precise listing of its MFN exeptions, incl. the underlying rationale

Negative List Approach (I) Everything liberalized (covered) unless otherwise specified and listed in the annexes

Negative List Approach (II) Annex 1: Stand-still schedule

Negative List Approach (III) Annex 2: Measures (sectors) permanently excluded from the agreement

Negative List Approach (IV) Annex 1: Stand-still schedule Existing measures included at the level of regulatory application; commitment to make the sector no more restrictive in the future Annex 2: Measures (sectors) permanently excluded from the agreement Government retains full regulatory freedom, e.g. regarding sensitive sectors and/or measures emanating in the future

Hybrid Approaches (I) Listed Listed Not listed Not listed Not listed Inscribed commitments (red line) do not deviate from the status quo (liberalisation as is), may promote greater liberalization

Hybrid Approaches (II) positive listing for cross-border trade (mode 1) and negative listing for commercial presence (mode 3)

Hybrid Approaches (III) Negative listing for banking services and positive listing for insurance services

Hybrid Approaches (IV) Positive list for Market Access, negative list for National Treatment

Structure of a Comprehensive FTA (Goods and Services, Services are Spread Throughout the FTA) General Definitions Trade in Goods (Tariff Schedules) Special Agriculture Measures Rules of Origin Customs SPS TBT Bilateral Safeguards Government Procurement Investment

Structure of a Comprehensive FTA (Goods and Services, Services are Spread Throughout the FTA) (II) Cross-Border Trade in Services (with Annexes for Existing and Future Measures) Temporary Entry of Business Persons Electronic Commerce Competition Policy Transparency Administration of the Agreement Dispute Settlement Exceptions Final Provisions

Structure of a typical “negative list” type of FTA for treatment of services Chapter on Cross-Border Services (Modes 1&2) Chapter on Investment (applying to Goods and Services, Mode 3) Chapter on Temporary Entry of Business Persons (Mode 4) Chapter on Financial Services (Disciplines applying only to this sector) Chapter on Telecommunications (disciplines applying only to this sector) List of non-conforming Measures in Annexes Source: Stephenson

Different Approaches Can Lead to Similar Commitments „...the challenge in reaching meaningful results (in services trade negotiations) lies in mobilizing the political resolve needed and articulating it properly in guidelines and modalities. What ultimately matters is not governments´preference for a particular architectural approach, but their strength of purpose.“ (Adlung/Mamdouh, WTO)

Literature Adlung/Mamdouh, 2013: How to Design Trade Agreements in Services: Top Down or Bottom Up? (downloadable from the net). Sauvé, Lacey, 2013: Services Liberalization; a Handbook on Negotiating Preferential Trade Agreements (downloadable from the net Schott, Lee, Muir, 2012: Prospects for Services Trade Negotiations (downloadable from the net) Stephenson, 2015: Overview of Various Approaches to Services Liberalization (downloadable from the net) World Bank, 2009: Negotiating Trade in Services (downloadable from the net)